Correlation Between Compugroup Medical and Eli Lilly

Can any of the company-specific risk be diversified away by investing in both Compugroup Medical and Eli Lilly at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Compugroup Medical and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Compugroup Medical SE and Eli Lilly and, you can compare the effects of market volatilities on Compugroup Medical and Eli Lilly and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Compugroup Medical with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compugroup Medical and Eli Lilly.

Diversification Opportunities for Compugroup Medical and Eli Lilly

-0.36

Correlation Coefficient

Compugroup Medical  Eli Lilly

Very good diversification

The 3 months correlation between Compugroup and Eli is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Compugroup Medical SE and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and Compugroup Medical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Compugroup Medical SE are associated (or correlated) with Eli Lilly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eli Lilly has no effect on the direction of Compugroup Medical i.e., Compugroup Medical and Eli Lilly go up and down completely randomly.

Pair Corralation between Compugroup Medical and Eli Lilly

Assuming the 90 days horizon Compugroup Medical SE is expected to generate 1.91 times more return on investment than Eli Lilly. However, Compugroup Medical is 1.91 times more volatile than Eli Lilly and. It trades about 0.01 of its potential returns per unit of risk. Eli Lilly and is currently generating about -0.02 per unit of risk. If you would invest  2,348  in Compugroup Medical SE on September 30, 2024 and sell it today you would lose (172.00) from holding Compugroup Medical SE or give up 7.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Compugroup Medical SE  vs.  Eli Lilly and

Compugroup Medical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compugroup Medical SE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Compugroup Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Eli Lilly

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eli Lilly and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Eli Lilly is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Compugroup Medical and Eli Lilly

The main advantage of trading using opposite Compugroup Medical and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compugroup Medical position performs unexpectedly, Eli Lilly can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Eli Lilly will offset losses from the drop in Eli Lilly's long position.

The idea behind Compugroup Medical SE and Eli Lilly and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.